Datatec, a multinational IT services provider active in over 50 countries, is banking on spending driven by AI to boost sales of hardware and software for its global IT business. As one of the JSE’s largest ICT services firms, the company has observed growing demand as enterprises allocate resources toward secure networked environments to enable AI deployment across both enterprise and edge computing environments.
The group’s interim financial report for the half-year period ending August revealed a significant increase in gross invoiced income, which rose by 18% to $4.835 billion. Revenue also grew by 13.9% to $2.024 billion. Although earnings before interest, tax, depreciation, and amortization (EBITDA) declined by 7.8% to $128.1 million, adjusted EBITDA, excluding one-time restructuring expenses, improved by 16.6% to $150.7 million. Underlying earnings per share surged by 56.5% to 30.2 US cents.
Datatec’s operations span two primary divisions: Logicalis and Westcon International, the latter distributing security and networking technology products. The company credits its financial performance to rising investments in AI infrastructure, which has heightened demand for its technology offerings. “AI adoption is accelerating investment in IT infrastructure as it expands into the enterprise and the edge of the internet, increasing the need for secure networked environments,” the group said as it reported interim results for the six months to end-August. CEO Jens Montanana’s company has benefited from this investment with Datatec saying AI infrastructure investment is driving demand for its products and services.
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Jens Montanana, Datatec’s chief executive, pointed to the financial benefits generated by Westcon’s refinancing initiative, which returned R7.1 billion ($438 million) to shareholders. This continues to advance Datatec’s value realisation journey, bringing total returns to shareholders since inception to $1.5 billion. The results reflected the continued excellent performance at Westcon and record results from Logicalis International, with weak operating results in Logicalis Latin America. “The quality of earnings improved with continued operating leverage. Strong AI infrastructure demand supports a robust full-year outlook,” he said.
Looking ahead, the group’s performance in the second half “will be impacted by the Westcon International minority investment and refinancing transaction and additional shares in issue as a result of the scrip take-up of the special dividend”. The group declared an interim dividend of 250c, up 42.9% on the previous comparable period. On Thursday, Datatec’s share price closed 2.02% lower at R59.77.
